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Ernst & Young's Massive Accounting Fraud?

Never Asked

The New York Times reported in December that:

New York attorney general Andrew Cuomo, who is now governor, sued Ernst & Young, accusing the firm of helping Lehman Brothers " 'engage in a massive accounting fraud' by misleading investors about the investment bank's financial health..."

Ernst & Young, Lehman's and Coca-Cola's longtime outside auditor, "certified the bank's financial statements from 2001 until it filed for bankruptcy in September 2008..."

The suit questions Ernst & Young's approval of transactions involving "the surreptitious removal of tens of billions of dollars of securities from Lehman's balance sheet to create a false impression of Lehman's liquidity, thereby defrauding the investing public."

" 'This practice was a house-of-cards business model designed to hide billions in liabilities in the years before Lehman collapsed,' and helped hide 'crucial information from the investing public...' "

It's irresponsible that nowhere in Coke's financial statements is there any mention of billions of dollars in potential liabilities that Coca-Cola is currently facing. These potential liabilities include lawsuits alleging human rights abuses in Guatemala, illegal outsourcing in Mexico that is cheating workers and the Mexican government out of pay and tax revenues and contamination of residents' drinking water in Paw Paw, Michigan.

In India, after years of lying and denying any wrongdoing, the Company will have to pay an estimated $48 million, or more, to compensate victims in Plachimada for water pollution, agricultural losses and endangering the health of thousands. And this is just the tip of the iceberg regarding environmental damage that Coca-Cola and its operations are causing in India, China, El Salvador and Kenya.

Could it be that birds of a feather flock together? Why would Coke want its reputation besmirched by a relationship with Ernst & Young? Why would Ernst & Young want its reputation besmirched by a relationship with Coca-Cola?

Perhaps we should begin to clean up our own act and vote against the appointment of Ernst & Young.